Your Q4 2017 outlook
Hear how movements in the economy could have affected your investments in Q4 2017
CAPTION: When you invest with us, the global economy is one of the few things we consider when making decisions about how to grow your pension pot. So what do the next few months have in store? Hear from the people who manage your money...
TREVOR GREETHAM: I'm Trevor Greetham, I'm head of Multi-Asset Investments at Royal London.
Pensions are a long-term investment, so it's very important that the mix of assets we have in the pension pot is appropriate for the long-term. We relate the way we invest the pension pot to what's happening in the world's economic cycle, and the two things that really matter to us are what's happening to growth and what's happening to inflation.
When you have an environment where growth is strong and profits are good, but inflation is low enough that interest rates can stay low, shares in companies tend to be one of the best places to invest. We've been investing a larger proportion of pension pots in company shares for the last few years and we think it will continue to be appropriate to have a higher exposure to company shares than normal.
And because inflation worldwide is still low, interest rates have started to rise, but only very gradually, we're not going to get to a situation, we think, where we'd see central banks raising interest rates in a more meaningful and sustained way and raise the risk of the economy moving into a slower patch.
Of course, the Brexit negotiations matter a lot for portfolios as well. So having that mix of investments as you do in your pension pot really protects you against some of the volatility associated with Brexit, because if you were to see a situation where the pound were to go down on a no-deal outcome of the Brexit talks, property prices might drop, but company shares would do quite well because when the pound is weak, UK companies have a lot of exports and they make more money on those exports. So, while you'd lose something on property you'd make something on shares. And obviously if things turn out the other way around and the pound goes up a lot, you might have a situation where property goes up a lot, but maybe shares aren't doing so well.
More importantly, the closer you are to your planned retirement date, the more of your investments we'll be holding anyway in the safer investments like government bonds, like corporate bonds, which are already in sterling, the money you'll spend your money in. And therefore you don't need to worry so much about the volatility of exchange rates. We will continue to monitor your investments as things change in the world economy and the world of politics to make sure that we've got the exposures to different investments in the place where we think you'll get the best growth and you'll hear more from us about the world economy and how things are changing in your portfolio in future member updates.
CAPTION: If you're unsure about pension planning, an impartial financial adviser can provide guidance based on your needs. For more information on the market context and your pension and investments, visit our Articles & videos page.
More on how we manage your money
What happens to your pension money?
Lorna Blyth and Trevor Greetham tell you how we invest your retirement savings to help them grow.
Getting the right mix for your pension
Lorna Blyth and Trevor Greetham tell you why a mix of investments is important to help grow your pot and reduce risk.
How we make investment decisions
In order to grow your pot, there are a number of decisions we have to make when it comes to investing your money.
What happens when you invest with us?
Piers Hillier, Chief Investment Officer at Royal London, explains how we invest With Profits members' money to get you the best possible returns.
Growing your investments
There are a wide range of methods and markets in which we can grow your investments. Our Chief Investment Officer Piers Hillier explains how.
What is a with profits investment?
Watch our animation to see how investing in traditional with profits products works, and the ways in which it can benefit you.